BMRA director general Ian Hetherington told MRW: “We anticipate 2010 will continue to be a difficult year.
“We detect that most [metal recyclers] have planned pretty well and they’ve cut costs according to the economic outlook. The industry is in good health and I don’t see that there will be a huge rise in business failures.
“However, they may come under stress when growth returns and the amount of working cash available is very low because of the recent low trading levels. Firms need to be able to buy more material in order to be able to grow, which puts a lot of strain on the working cash.”
Hetherington explained that it is not just the UK industry that is experiencing difficulties and that those in Europe feel the same way.
Furthermore, with the impending mothballing of the Teesside Cast Products plant at the end of January Hetherington commented: “Any weakening of the UK steel industry is bad for business. Our members are very resourceful and have found new markets for this scrap but a strong home for steel scrap is very important to the UK industry. Everyone accepts there is over capacity and somehow or other this must be dealt with but I don’t think this is the death knell to the UK industry.”
He explained that in a global market the UK struggles to be competitive against low-cost producers. This is due to a higher UK cost base, an older infrastructure, which is possibly not as efficient as a result of older plants and equipment and significant over capacity across the world.